By Lauren Holappa
At its August 31, 2022, Quarterly Board Meeting, the California State License Board (CSLB) discussed how to address issues involving unlicensed contractors or the “underground economy.” According to CSLB, 18-20 percent of all consumer complaints received by the Board involve unlicensed contractors. In June 2022, CSLB surveyed 180 random online advertisements in Northern, Central, and Southern California. The survey revealed that 78 percent of ads did not provide a contractor’s license number. It is presumed these advertisers are likely unlicensed.
CSLB is taking action to protect consumers from the harms of unlicensed contractors. One of its goals is to return its undercover sting operations for unlicensed activity to pre-Covid levels. Before the pandemic, CSLB Statewide Investigative Fraud Team (SWIFT) averaged six or more undercover sting operations a month.
There has been particular focus on the Paradise area of Butte County as Camp Fire survivors work to rebuild. SWIFT and the Butte County District Attorney’s Office have paired up to be extra vigilant in detecting unlicensed contractors who are trying to take advantage of the situation. In September 2022, the two agencies collaborated in performing an undercover sting operation. Seven individuals were caught, three of whom face felony charges for contracting without a license in a declared disaster area. In addition to increased sting operations, on September 30, 2022 the Governor signed SB 216 (Dodd) (Chapter 978, Statutes of 2022). SB 216 takes effect on January 1, 2023, and will require workers compensation insurance for the CSLB contractor license classifications most likely to have employees (C-8/Concrete, C-20/HVAC and D-49/Tree Service). They will no longer be allowed to file an exemption. This regulation applies to all licensed contractors in 2026. [27:2 CRLR 97–98]
Lastly, CSLB also plans to retain outside consultants to determine the size of California’s underground economy in the construction industry and improve outreach to consumers about civil remedies available through Business and Professions Code section 7031.